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What is the Structure and Buildings Allowance (SBA)?

What is the Structure and Buildings Allowance (SBA)?

What Is It? 

A Structures and Buildings Allowance (SBA) was introduced for qualifying expenditure incurred on or after 29 October 2018. SBAs are available for qualifying expenditure incurred on the construction of new, and the enhancement of existing, commercial buildings and structures.

SBAs are not available for expenditure incurred on buildings which are in ‘residential use’.

How does it work? 

The allowance is 3% of cost on a straight-line basis of £% per year, over 33 1/3 years,

SBAs apply to capital expenditure on structures and buildings used for qualifying activities. Qualifying activities include:  

  • A trade, profession or vocation.
  • A UK or overseas property business that is not a furnished holiday let business.

Structures and buildings include:

  • Offices, retail and wholesale premises.
  • Walls, bridges and tunnels.
  • Factories and warehouses.

Qualifying expenditure on construction costs includes fees for design, preparing the site for construction, construction work, renovation, repairs and fit-out costs. 

SBA can be claimed on the enhancement of existing commercial buildings and the construction of new commercial buildings.

What is an allowance statement?

An allowance statement must be provided by the first owner and to all future owners to enable them to claim the allowances or the qualifying expenditure will be treated as nil.

An allowance statement is a written statement that contains specific information about the items on which the SBA is being claimed and needs to be kept to date.

When the building or structure is sold

Where an asset qualifying for SBA is sold, the new owner can claim the allowance if it is used for a qualifying activity. 

Where the SBAs are transferred to a new owner, the amount of the original expenditure may need to be verified if SBA is not already being claimed (via an allowance statement).

What should I do next? 

If you would like to discuss your company’s position as to whether SBAs can be claimed please contact Jess Gray, our Business Tax Advisor,

Critchleys Clients: If you have specific questions, don't hesitate to get in touch with your Critchleys contact directly.